A Rising Middle Class

The increasing economic prosperity of many developing countries lays the groundwork for improving the lives of their citizens. Consequently, this brings new challenges and an urgent need for new and improved social and environmental policies.

Examples of the challenges resulting from increased economic prosperity:

· Rising income inequality

· Structural transformation

· Meeting standards of living

· Environmental degradation

With a rising middle class due to a newly prosperous economy, patterns of consumption begin to change; demand for quality services increase, and disconnect between the middle and politically elite class concerns grows. Some issues resulting from such a disconnect in recent history include:

The Arab spring

Conflicts about wage increases in Asia

Disputes about access to quality education in Canada and the US

Fears of welfare programme disruption throughout Europe

These issues threaten countries’ social cohesion and weaken people’s sense of belonging, inclusiveness and opportunities for social mobility. With that being said, governments should not neglect to address the toils of an emerging middle class nor underestimate their ability to mobilise and exert pressure for more open and transparent government practices and increased service provision standards.

A Critical Policy Objective

Governments which ignore questions of social cohesion risk having to face social instability and undertake ineffective policy interventions. It is clearly not sufficient to apply technocratic policy frameworks and disregard people’s desire for an inclusive political process.

There are different areas of public policies that are key to social cohesion.

Fiscal policy

Greater fiscal space opens a window of opportunity for development and stronger social cohesion in developing countries. For opportunities to materialise, however, fiscal policy reforms perform best. Available windfall gains and resources produced by shifting wealth are beneficial to finance social programmes.

Challenges when implementing good fiscal policy:

Long-term financial sustainability of social programmes

an elusive objective in the widespread context of volatile revenues that depend on fluctuating commodity prices and the depletion of non-renewable natural resources.

Ensuring social trust

Depend on how taxes are raised and how revenue is spent

Fiscal policy tends to reflect the interests of elites and powerful lobbies

Increasing fairness, transparency and tax morale

Employment and social protection

Social cohesion calls for the establishment of labour market institutions that can facilitate the wage-setting, distributional and allocative roles of labour markets. Reforms setting out guarantees for workers and collective bargaining systems can begin to establish institutions that will assist markets in adjusting prices to the new labour market regime more smoothly, while ensuring that wages reflect productivity increases.

In the short run, more traditional instruments of labour market regulation, and in particular minimum wages are a useful tool against working poverty even when compliance is limited. Indeed, minimum wage increases spill over into the informal sector which raises wages throughout the economy. Active use of minimum wages to increase incomes should therefore not be a substitute for effective social policy and for ensuring that labour market institutions fulfil their price-setting role efficiently.

Fostering social cohesion via social services:

Contingent on adequate resources and efficient public spending

Must contrast with governments who often provide subsidies/payments that benefit the non-poor

Prevent or mitigate duality and segmentation, not solely be efficient in monetary terms

Utilize targeted cash transfers; programmes in Brazil, Indonesia and Mexico have attained coverage of up to one-third of the population through targeted cash transfers whilst costing them less than 1% of their GDP[1].

Decouple social protection from job status through universal entitlements in order to offer best coverage at all levels

Challenges:

Costly increases due to rising minimum wage can lead to negative employment

Minimum wage changes are unequal across workers

Can often lead to dual systems where social assistance covers the poorest and private or contribution-based alternatives cover the wealthy, which leads to significant gaps in social protection

Universal access to social services are difficult to achieve in the short to medium term

Education

Education is a vital part of any social cohesion agenda because educational outcomes affect all three dimensions of the social cohesion triangle. When opportunities for quality education are possible across the population, schooling becomes a strong leveler of opportunities, bringing prospects for upward mobility even to disadvantaged groups. Increasing educational attainment is an important way for converging countries to reduce inequality in market incomes in the long run, particularly as returns to education change as a consequence of shifting wealth.

Opportunity to close gender gap and break the inter-generational transmission of poverty (Gender-sensitive school policies and facilities foster social integration)

The schooling experience itself also impacts social cohesion, as it shapes and transmits common values that underpin social capital and inclusion. How children are schooled is important to build their sense of belonging to a society. Greater inclusiveness of schools for all social groups can also result from the development of teaching techniques and curricula that foster diversity and enhance positive perceptions of others within the system and society. Countries where inclusion at school is greater are generally those where trust between different groups in society is stronger. By ensuring inclusion, social capital increases, making a more productive economy and society.

Areas where education can improve:

Reducing the opportunity cost of continued education can improve attainment levels

Lowering the cost of schooling can encourage secondary completion and higher enrolment

Gender

Despite high growth in the last 20 years, many countries have not made any real headway in improving gender equality. Cultural dynamics and the fact that social institutions lie at the root of existing power relations make challenging discriminatory social institutions a daunting task. Providing incentive for change is therefore crucial. These changes can occur in the areas of

Limited access to resources reduces the ability of women and girls to generate a sustainable income, and can lead them to take up more poorly paid, insecure, and sometimes dangerous employment. Furthermore, the lack of access to and control over land can have a negative impact on the food security of the household, increase women’s vulnerability to poverty or violence, prevent them from accessing bank loans or financial services, and reduce their decision-making power.

Migration

While immigrants face many of the same challenges as native populations, many are deprived access to decent public services as well. Contrary to what one might think, the history of integration in OECD countries seems to suggest that the earlier countries address this issue, the more successful policy interventions will be. This notion has recently been integrated in the new Sustainable Development Goals released by the UN in 2015. Stress placed on issuing policies that integrate all segments of society quickly is critical in achieving target measures by 2030.

Migration-related social cohesion policies should:

Go beyond anti-discrimination measures and include a comprehensive set of social, employment, education and housing measures

Include improvement of native-born citizens’ perceptions of immigrants

Designing and Implementing Social Cohesion Policies

Civic participation

Providing citizens and migrants with the proper space to voice their concerns is fundamental to the creation of a sustainable, socially cohesive society. The harnessing of civic participation and political feedback mechanisms is essential for positive and continuous growth. This is particularly true in the context of shifting wealth, which quickens economic growth and social dislocation and requires innovative responses. The process of policy making is as important as the policies themselves for building social cohesion.

Social cohesion is enhanced by an inclusive, coordinated policy-making process: it brings in the views of all stakeholders – from those involved with their implementation to the final beneficiaries. Implementing a social cohesion policy agenda requires effective administration and coordinated action across multiple policy domains. Strong institutions and a quality public service are the foundation for successful public action. Besides, the involvement of multiple actors across different levels of government requires negotiated roles to ensure accountability.

Better data, better assessments, better policies

Policy making also needs to be more evidence-based. Economic and social policies to foster social cohesion in practice require a framework:

Do they lead to more or less social exclusion?

Do they foster trust and civic participation?

Do they help to improve social mobility?

Monitoring and evaluating social cohesion policies to answer these questions requires new indicators and data. As advocated in the SenStiglitz-Fitoussi commission’s report in 2009, progress measurement should embrace indicators beyond GDP growth to capture other dimensions of well-being. Absolute and objective measures of progress should complement with objective and subjective measures for more effective assessment. Efforts to collect data to calculate such measures currently focus on developed countries and are mostly carried out by private organisations, like the OECD. Comparability, availability and quality of data must improve in national statistical offices worldwide; in accordance to the Data Revolution (see also Choosing the SDG indicators). However, the full potential of the data is best exploited only if

There are international standards for data collection

Statistical capacity building is facilitated in countries where it is needed

Data is made public as much as is possible. The work of PARIS21 [7]is particularly relevant in this respect.